Paulson Waffles On Homeowner Relief
The Bush administration went all out today on behalf of its $700 billion financial bailout plan. Treasury Secretary Henry Paulson made the rounds on the Sunday morning talk shows, calling for speedy congressional approval, with no major changes of a plan whose price-tag amounts to more than $2,000 for every man, woman and child living in the U.S.
Although support for the Wall Street rescue is strong, some Democrats want to include help for strapped homeowners facing foreclosure, CBS News correspondent Kimberley Dozier reports. Paulson appealed to the American public this morning, making his case for the largest financial bailout since the U.S. depression.
"We felt this was the best way to stabilize the situation, unclog the system, so it can work," Paulson told CBS News' Chief Washington correspondent Bob Schieffer on Face the Nation.
He's seeking $700,000,000,000, for the Treasury to buy up those sub-prime mortgages, and other risky loans and securities, that brought Wall Street to its knees.
Critics in Congress, who are working with Treasury staff on a draft rescue bill, want to know - why save the lenders - and not the borrowers who can't pay off those loans?
"We have to do something more for homeowners," said Sen. Chuck Schumer (D-NY).
At first, Treasury Secretary Paulson sounded like he agreed.
"I think there should be a mortgage relief component to this," Paulson told Fox News Sunday.
But on ABC's This Week, Paulson seemed to back off the idea of carving out some of the massive bailout sum for homeowners who got in over their heads.
"No foreclosure protections, no restrictions," Paulson said.
He seemed to say "no" to adding anything else to the bill.
"What I'm saying is, we need this to be clean and quick, and we need to get it in place," the Treasury Secretary continued.
But critics of the plan would also like to add a sting in the tail - some sort of financial penalty and new oversight of those institutions that made all those bad loans.
"Capitalism without bankruptcy is like religion without hell," said Dan Mitchell of the libertarian Cato Institute. "You're gonna remove one of the incentives that makes people behave wisely."
Wall Street likes the rescue plan just as it is, Dozier reports. The Treasury proposal drove stocks from record lows back up into the black on Friday.
That recovery was based on the belief that the White House and Congress would come to a swift resolution. Any lengthy delay could mean another dip or dive, and that's going to put pressure on both sides.